VA Loan Benefits for Disabled Veterans: Funding Fee Waived

Maximizing Your Benefits: 4 Ways Service-Connected Disability Impacts Your VA Home Loan

For the men and women who have served our country, the VA home loan is a powerful benefit designed to make homeownership more accessible. However, many veterans aren’t fully aware of the additional financial advantages available if they have a service-connected disability.

In an insightful episode of “Home School,” the experts at loanDepot highlight four key ways a disability rating can significantly lower the cost of a mortgage and increase a veteran’s borrowing power.

Key Takeaways

• Disabled veterans are exempt from the VA funding fee, leading to significant savings on closing costs.
• Service-connected disability payments can be counted as effective, grossed-up income to increase borrowing power and loan qualification.
• Veterans may be eligible for Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA) grants to construct or modify a home.
• Many states offer property tax exemptions or reductions for disabled veterans, further reducing the cost of homeownership.

1. The VA Funding Fee Waiver

One of the most immediate financial benefits for disabled veterans is the funding fee waiver. Typically, VA loans require a one-time funding fee that can range from 1.25% to 3.3% of the loan amount.

The Advantage: If you are a veteran currently receiving compensation for a service-connected disability, you are exempt from this fee. This represents a “huge savings” on your total closing costs, often saving you thousands of dollars at the signing table.

2. Using Disability Income to Qualify

A common question among veterans is whether their monthly disability checks can be used to help them qualify for a mortgage.

The Advantage: At loanDepot, disability payments are counted as effective income. Because this income is typically tax-free, it can be “grossed up” in the mortgage application, potentially giving you more borrowing power and helping you qualify for a higher loan amount than your base salary alone would allow.

3. Adaptive Housing Grants (SAH & SHA)

For veterans with specific service-connected disabilities, the VA offers specialized grants to ensure their home is a safe and accessible environment.

• Specially Adapted Housing (SAH) and Special Housing Adaptation (SHA): These are two distinct programs that provide funds to construct a specially adapted home or modify an existing residence to meet specific physical needs.
• Integration: These adaptive housing grants can often be used alongside a VA home loan, allowing you to finance the purchase of a home while utilizing grant money for the necessary modifications.

4. State-Level Benefits and Property Tax Exemptions

While the VA loan is a federal program, your local state government may offer additional perks that further reduce the cost of homeownership.

The Advantage: Many states offer property tax exemptions or significant tax reductions for disabled veterans. Because these benefits vary widely from state to state, loanDepot recommends researching the specific laws in your area to see how much you can save on your annual tax bill.

Expert Support for Our Veterans

Navigating the intersection of VA benefits and mortgage lending can feel overwhelming, but you don’t have to do it alone. loanDepot specializes in VA loans and is committed to helping veterans understand every advantage they’ve earned through their sacrifice and commitment.

Take the Next Step Toward Your Dream Home:

• Watch the Lesson: Listen and learn by watching the video.
• Verify a Property: Found a home but not sure if it qualifies? Contact a loanDepot VA specialist today to review the property details.